First time buyers look to second jobs and loans to raise deposit
Aspiring first time buyers are increasingly taking on second jobs, taking out personal loans or sharing payments with friends to raise money for a deposit on their first home, according to new research from Santander Mortgages.
With average housing deposits reaching £37,375 or 17 per cent of overall property value, a third of all non-homeowners believe they will never own a property. However, one in four current non-homeowners (26 per cent) say they are hoping to buy within the next five years.
Over a quarter (28 per cent) of hopeful first time buyers say they will turn to second jobs or overtime to secure their deposit funds and 27 per cent say they are prepared to take on extra debt by taking out a personal loan to raise the money. This differs considerably to current homeowners, who purchased their properties an average of 12.5 years ago, of which just 5 per cent say they relied on overtime or a second job and 4 per cent took out a loan to raise their deposits.
Savings (54 per cent) remain the most popular way of funding a deposit but the proportion of potential buyers relying on inheritance money has almost doubled, moving from 8 per cent for current homeowners to 14 per cent for aspiring first time buyers.
Renting out a spare room (7 per cent) and sharing the deposit payment with friends (6 per cent) are also increasingly popular methods of affording a deposit.
Phil Cliff, Director of Santander Mortgages, commented: "The housing market is a tough place, particularly for first time buyers and with property prices averaging over £200,000 it's no wonder people are becoming increasingly resourceful when it comes to raising deposit. Despite a somewhat stagnant housing market, the mortgage market is actually very competitive, which is why it's vital that people shop around to ensure they are getting the best possible mortgage deal.
"£37,000 is a lot of money to find, particularly during these difficult economic times which is why we offer a number of products dedicated to first time buyers, including our latest 90 per cent LTV products. Plus our Homebuyer Solution which offers borrowers the added benefits of a free standard mortgage valuation and £250 cashback on completion, will certainly come in handy."
In the past, aspiring homeowners saved for an average of 29 months for their deposit, while today's first time buyers expect to save for around 40 months for theirs.